BSP cuts rates amid economic slump

While the Bangko Sentral ng Pilipinas (BSP) cannot directly address flood-control graft, the central bank chief said its latest interest rate reduction in the ongoing monetary easing is expected to support the crestfallen economy, which has been hit by a spending slump and dampened investor confidence.

- By DERCO ROSAL

BSP Governor Eli M. Remolona Jr. told a press briefing on Thursday, Dec. 11, that “monetary policy cannot address the corruption scandal directly, but it can compensate for its effects on business sentiment and investor confidence.”

Remolona’s remarks come amid the central bank’s latest quarter-point reduction in key borrowing costs to 4.5 percent from 4.75 percent previously. This is the latest move ina series of adjustments that began in 2024.

This cut marks the fifth consecutive rate reduction this year and the eighth cut since August 2024, totaling two percentage points (ppt) from 6.5 percent prior to the start of the easing cycle in August last year.

“The cut will revive economic activity a bit at a time when painful governance issues around infrastructure investments, weakened government spending, business confidence, and domestic demand persist,” Remolona said.